Apple may face iPad export ban in China trademark row

HONG KONG/SHANGHAI Tue Feb 14, 2012 2:32pm EST

A person tries out an Apple iPad 2 at the company's new store in Nanjing Road, Shanghai September 23, 2011. The store is Apple's fifth and largest in mainland China. REUTERS/Aly Song

A person tries out an Apple iPad 2 at the company's new store in Nanjing Road, Shanghai September 23, 2011. The store is Apple's fifth and largest in mainland China.

Credit: Reuters/Aly Song

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HONG KONG/SHANGHAI (Reuters) - A Chinese tech firm that claims it still owns the iPad trademark will seek a ban on exports of Apple Inc's computer tablets from China, which could deal a blow to the U.S. technology giant's sales worldwide.

Proview Technology (Shenzhen) Co Ltd is petitioning Chinese customs to stop shipments of Apple's popular iPads in and out of China, but has not received a response, lawyer Xie Xianghui told Asian Legal Business, a Thomson Reuters publication.

Apple said it bought Proview's worldwide rights to the trademark in 10 different countries several years ago, including

rights to the iPad name from a Taiwan subsidiary. However, Proview claims the sale did not cover the trademark's use in China.

"Proview refuses to honor their agreement with Apple in China and a Hong Kong court has sided with Apple in this matter," an Apple spokeswoman said.

Customs officials could not be reached for comment, and Proview declined to comment.

Apple could be in a very difficult situation if it had mistakenly bought rights from the wrong Proview subsidiary, said Thomas Chan, a Los Angeles-based attorney who has represented companies in trademark licensing negotiations with Apple.

"They've got a real, real problem," Chan said. "They're going to pay through the nose."

Apple's legal tussle with Proview Technology (Shenzhen) over the trademark name iPad, is emerging as the latest headache for the U.S. giant in a booming market and highlights the legal challenges facing foreign multinationals operating in China.

Not only is China a huge consumer market but it is also a major production base for the U.S. company's iconic products including the iPad, iPhone and iPod media player.

This week Apple announced it had agreed to an outside inspection of working conditions at its main contract manufacturers, including Foxconn's plants in southern China.

Apple lost a case to Proview Technology (Shenzhen) in a Shenzhen court in southern China late last year when the court agreed that Proview owned the iPad trademark.

Apple has appealed the decision and a final hearing is due to start in the southern Guangdong High Court on Feb 29. This court's decision will be final under the Chinese legal process.

Proview's latest salvo comes a day after media reports that authorities in some Chinese cities had ordered retailers to stop selling Apple's iPad due to the dispute.

Proview has also filed lawsuits against Apple in Shanghai and Shenzhen, and retailers selling iPads in Futian and Huizhou, located in the south of the country.

Apple's options are limited to either settling with Proview Technology (Shenzhen), appealing to a higher court, or facing devastating enforcement actions in China, legal experts said.

"There are two views we can take here. One view is, Apple was not sufficiently prudent and therefore, this was missed by Apple and its attorneys," said Elliot Papageorgiou, a Shanghai-based partner and executive at law firm Rouse Legal (China).

"A more charitable view would be that, Apple said that for business reasons we need to use this brand and as far as the name in China is concerned, let's cross the bridge when we come to it," he said.

Proview lawyer Xie, partner of Grandall Law Firm's Shenzhen office, said Apple is not in negotiations with the Chinese firm.

Local media reported recently that Proview was taking legal action, seeking up to 10 billion yuan ($1.6 billion) in compensation from Apple for trademark infringement.

"Without a win in that Shenzhen case, all the other actions, whether it is administrative or with different courts, customs, Apple is not in a good position at all," said Stan Abrams, an IP law professor at Beijing's Central University of Finance and Economics.

(Additional reporting by Lee Chyen Yee in Hong Kong and Dan Levine in San Francisco; Editing by Neil Fullick and Richard Chang)

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Comments (45)
This is quite ridiculous. You can walk down the street in any major city in China and find multiple shopping centers or shopping areas that sell pirated products from the West. These are products that are just released and show up on the shelves a day or two later. Nobody even takes notice or does anything to shut them down, even with the police standing at the mall doorway. I’m all for IP protection, but in this case talk about the pot calling the kettle black. Hypocrisy at its best.

Feb 14, 2012 11:12am EST  --  Report as abuse
I failed to mention that there are next to no legal copies of Windows in China either. They are all stolen IP that is re-engineered. When Microsoft pulled the plug a few years back by executing code in the operating system to produce a black screen on boot the entire country called foul, including legitimate business and government. Talk about IP infringement. This trademark dispute is utterly ridiculous due to the sheer volume of IP and trademark infringement that already exists in China.

Feb 14, 2012 11:16am EST  --  Report as abuse
dwatso25 wrote:
All the intellectual property fraud is done with the full knowledge, and perhaps direction of the Chinese government. If apple begins to loose the ability to do business in China, Foxcon (which is a evil place, look it up) will just begin making ripoffs and flood the market. I guess this is what happens when you make a deal with the devil.

Feb 14, 2012 1:24pm EST  --  Report as abuse
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